Japan stocks rose, with the Nikkei (MXAP) 225 Stock Average rising to near a month high, as official projections showed parties supporting Greece’s bailout won enough seats to control parliament, easing concern the euro currency bloc would lose one of its 17 members.
Power-tool maker Makita Corp. (6586), which gets the highest proportion of sales in Europe among Topix companies, advanced 4.6 percent. Ibiden Co., a ceramic maker, gained 5.3 percent after its equity rating was raised to “buy” at Bank of America Merrill Lynch. Honda (7267) Motor Co. rose 1.7 percent on a report the automaker will shift output to smaller models to meet growing demand while scrapping some high-end sedans.
The Nikkei 225 climbed 2.2 percent to 8,759.11 at the 11:30 trading break in Tokyo, set for the highest close since May 22, with volume 9 percent below the 30-day average. The broader Topix gained 1.6 percent to 738.46, with more than seven shares rose for each that fell.
The result of the election was “positive because it helped reduce excessive concern that Greece may separate from the euro currency,” Takashi Aoki, a Tokyo-based fund manager at Mizuho Asset Management Co., which overseas about $34 billion. “However, tortuous negotiations on the European debt crisis are expected. I don’t think investors will quickly move to a risk-on mood.”
Volatility declined as stocks advanced. The Nikkei 225 Volatility Index (VNKY) tumbled 16 percent to 24.36 today, the biggest drop since March. The reading indicates traders expect a swing of about 7 percent on the gauge over the next 30 days.
Stocks rose after Greece’s pro-bailout New Democracy and Pasok parties took a majority in the 300-member parliament, according to the official projection by the Interior Ministry in Athens. The results eased concern that Alex Tsipras’s Syriza party would take control of the Greek government and reject austerity measures needed to qualify for international aid.
Makita Surges
Makita rose 4.6 percent to 2,879 yen. Nippon Sheet Glass Co. (5202), a glassmaker that generates about 40 percent of its sales in Europe, jumped 5.1 percent to 82 yen.
“Greece’s election is a good result and will provide some short-term relief,” said Nader Naeimi, Sydney-based head of dynamic asset allocation at AMP Capital Investors Ltd., which manages almost $100 billion. “This will put to rest for a little while the prospect of Greece leaving the euro.”
Futures on the Standard & Poor’s 500 Index advanced 0.4 percent after German Chancellor Angela Merkel’s government signaled willingness to loosen Greece’s austerity requirements so long as the nation abides by its obligations under the bailout program.
G-20 Boost
Leaders from the Group of 20 nations meeting in Mexico will boost the $430 billion firewall the International Monetary Fund announced in April, host President Felipe Calderon. European governments indicated a willingness to adjust the terms of Greece’s bailout package as long as a new government “swiftly” emerges from the closely fought election.
About $5.5 trillion has been erased from stocks around the world since March amid concern growth is slowing in the U.S. and China, the world’s two largest economies, and as Europe’s debt crisis intensified.
The euro strengthened to as high as 100.85 yen today in Tokyo, compared with 99.62 yen at the close of stock trading on June 15, boosting the value of some overseas income at Japanese companies when repatriated. The euro gained the most against the yen among major currencies.
Ibiden (4062) climbed 5.3 percent to 1,503 yen after Merrill Lynch raised the investment rating to “buy” from “neutral,” citing growing demand of printed-circuit boards for smartphones.
Honda rose 1.7 percent to 2,577 yen after the Nikkei newspaper reported the automaker will stop making production of top-end sedans Legend and Inspire by the end of this month, focusing to small-sized cars in Japan.
Nuclear Restart
Prime Minister Yoshihiko Noda approved the first restart of nuclear reactors shut for safety checks after the Fukushima disaster last year.
The Nikkei, which has lost 15 percent from this year’s peak on March 27, is trading at 1.1 times book value. This compares with 2.1 times for the S&P 500 and 1.3 times for the Stoxx Europe 600 Index, according to data compiled by Bloomberg. A number below one means companies can be bought for less than value of their assets.
To contact the reporter on this story: Adam Haigh in Sydney at ahaigh1@bloomberg.net
To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net
Small Talk: Whitehall needs to put its money where its mouth ison helping small business - The Independent
That is what is supposed to have happened after the Government announced in November 2010 that its goal would be to award 25 per cent of all contracts to SMEs. It even announced some reforms to help it achieve that target – notably a streamlining of the pre-qualifying questionnaires that bidders for public sector work must complete before even registering an interest in a contract.
Sadly, however, the initiative isn't working. Just 7.8 per cent of government contracts went to SMEs during the third quarter of last year, with not a single government department coming anywhere near the 25 per cent target. At the Department for Business, which championed the goal, the proportion of contracts awarded to SMEs during the third quarter actually fell, to 13 per cent compared to 16.5 per cent in the previous quarter.
Moreover, the reality of the data may be much worse than the headline figures suggest. Colin Cram, a specialist in public sector procurement, has just revealed a string of embarrassing disclosures made to him by the Department of Business on its 25 per cent target. Not only does it acknowledge that the target is an aspiration rather than a hard and fast policy, the department reveals that the 25 per cent only applies to central government contracts. This work accounts for just £65bn of the entire £236bn public sector spend.
Worse of all, says Mr Cram, the figures just unveiled are not necessarily for contracts handed directly to SMEs. Departments are allowed to include contracts where SMEs feature somewhere in the supply chain. In fact, with that flexibility, it's quite an achievement to have kept the SME contract count so low.
The suspicion must be that some departments are paying only lip-service to what was never a particularly impressive commitment in the first place. Although some of the bureaucracy involved in bidding for public sector work has now been eased, there are other ways to help SMEs get more of these contracts. In Scotland, public bodies have been given guidance on how to design tender processes so as to give SMEs a better chance of winning.
At the very least, converting the 25 per cent target from aspiration into fully fledged policy would be an important signal of intent. Announcing that only direct contract awards count would be even better.
Camera experts in the picture
OMG, which specialises in mobile motion capture – recording movements digitally – has unveiled two new contracts in the past few days.
In a £2.27m deal with the Highways Agency, OMG's Yotta subsidiary will spend four years working to determine the condition of 140,000km of Britain's main roads.
That contract win followed a deal to supply The Imaginarum with 80 of its specialist cameras. It will also be working with the studio, founded by the actor Andy Serkis (Gollum in The Lord of the Rings, right), and the film producer Jonathan Cavendish (best known for the Bridget Jones films).
The deals could mark a turning point for IMG, which had a tough year in 2011, though it remained profitable. The stock now trades at 24p, a third more than a week ago, but still well off the 44p high of a year ago.
Telecoms punt for £2.5bn growth fund
Though it became fully operational last April, the Business Growth Fund has been taking its time to make investments. The fund is backed by Britain's five biggest banks but operates autonomously and has £2.5bn of capital with which to make investments of between £2m and £10m in fast-growing small and medium-sized businesses. In return, it gets a seat on the board plus an equity stake of at least 10 per cent.
Until this month, the fund had made only three investments. Now there is a fourth, with BGF announcing it is putting £10m into Lincoln-based GCI Telecom Group. Founder 12 years ago by Wayne Martin, who still runs the business, GCI's telecoms and data services are producing annual revenues of close to £70m.
BGF is taking a minority stake – the exact stake is undisclosed – and has also installed the telecom industry veteran John Cronin on the board of GCI as non-executive chairman.
Small businessman of the week: Price is now so important – which is good news for us
Matt Davies founded DirectFerries, a ticket retailer and independent travel provider
The downturn hasn't necessarily been bad news for everyone, particularly if you're a business exposed to the way in which people are now so much more determined to get the best possible price.
One thing we've found over the past two or three years is that everyone is after deals all the time – it used to be that people knew they would get cheaper tickets if they booked well in advance, but now they expect that all the time. Price is everything – if people are not getting the best price, they're not going, and they're waiting to the last minute to make that decision.
Our business has also been a beneficiary of the unpredictable weather and industrial action that has wreaked havoc on the airlines – the UK market was starting to get a little stagnant three years ago, but the ash cloud was a huge boost for us and that has kept on going.
United Financial plans 286 apartments neighboring Meijer in Franklin - The Business Journal
United Financial Group Inc. changed the housing development plan for a 22.6 acre site in Franklin to accommodate the planned Meijer store and proposes 154 senior apartments and 132 market-rate units.
The project would expand Appleton-based United Financial’s Foresthill Highlands Senior Community in Franklin. The project would be on the north side of West Puetz Road, immediately east of the proposed Meijer grocery store that would face Highway 100.
The city of Franklin had already approved construction of 344 senior housing units on the property, but United Financial revised its plan to include market-rate apartments on the land closest to the Meijer store. Construction could begin in 2013 on 30 of the market-rate apartments, according to plans submitted to the city.
“The change from elderly housing to high-end market rate units on the west side of the parcel was necessary to accommodate the rear elevation, immediately adjacent truck access and loading docks of a big-box retailer,” United Financial wrote in a letter to the city. “The existing approved development of three, three-story elderly buildings directly adjacent to and facing the proposed retail big-box is no longer feasible or economically viable.”
The new project plan includes 130 senior apartments in a two- and three-story building and four townhouses with a combined 24 senior apartments. The market-rate apartments would be in four, two-story townhouse-style buildings with a combined 42 units, and three buildings, each with 30 apartments.
Meijer moving ahead
Meanwhile, Meijer Inc. is working through the city approval process for its 191,350-square-foot Franklin store at Highway 100 and West Loomis Road.
City officials reviewed the project at the end of April and asked for changes to the building design, landscaping and locations of driveways leading onto the property. The Grand Rapids, Mich.-based retailer has made some minor changes to its building location on the property, but no exterior design changes to the front of the store, said Franklin city planning manager Joel Dietl. The retailer is providing more details on the project landscaping plan, and is tweaking the locations of the entrances to the parking lot at Loomis Road and Highway 100, he said.
Sean Ryan reports on real estate, construction and public transit in southeast Wisconsin
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Stocks rise in Asian markets after Greek vote - The Boston Globe
TOKYO — Asian stock markets climbed early Monday after elections in Greece eased fears of global financial turmoil.
Tokyo’s benchmark Nikkei 225 index was up 2.1 percent, at 8,749.31. Hong Kong’s Hang Seng rose 1.8 percent to 19,578.13. Australia’s S&P/ASX200 rose 1.6 percent to 4,123.30. South Korea’s Kospi rose 2.2 percent at 1,899.49 as relieved investors snapped up South Korean exporters.
Japanese vehicle makers soared on hopes that Europe, a huge export market, would avoid further economic troubles. Mazda Motor Corp. jumped 5 percent while Yamaha Motor Co. gained 4.8 percent.
Steelmakers and shipyards also gained ground. South Korea’s top shipbuilder, Hyundai Heavy Industries, rose 3.7 percent. Japan’s JFE Holdings Inc. added 4.7 percent and Kobe Steel rose 4.4 percent.
Masahiro Yamaguchi, a manager at Mizuho Securities Co. in Tokyo, said the perk in Tokyo stocks came from a sense of relief that the worst had been avoided in Greece.
‘‘There’s is a rebound simply because the risks are now reduced,’’ he said.
But the rise in Tokyo stocks could be short-lived as Japanese issues were not directly at risk over what might happen in Greece, and the decline had been more based on risk fears, he said.
‘‘There’s a sense that, at least, things are OK for now. The solution is far from basic,’’ he said.
In Greek elections Sunday, pro-bailout parties won enough seats to form a joint government. That eased fears of an imminent Greek exit from the 17-nation euro currency union that could have had catastrophic consequences for other ailing European nations, the United States and the entire global economy.
The next two weeks could prove critical if any grand solution to the crisis is to be achieved. The leaders of the world’s 20 largest economies gather Monday in Los Cabos, Mexico, for a summit, with Europe sure to be a major point of discussion.
And on June 28 and 29, leaders of the 27 member countries of the European Union will hold perhaps the most important meeting since the body was created two decades ago.
Try BostonGlobe.com today and get two weeks FREE.Financial system: Change for the better will come – but not yet - Financial Times
June 18, 2012 12:35 am
Islamic finance: Notion of stewardship imbues business ethics - Financial Times
Since the start of the global economic crisis in 2008, financial education has been under increased scrutiny from those dissecting what went wrong. Who, after all, had trained the perpetrators of the crisis? Were the “masters of the universe” ever taught about ethics? And if not, why not?
Training in Islamic finance, which was already gaining in popularity pre-crisis, has grown from strength to strength, as it has developed a reputation as a haven of common sense and relative security in uncertain times.
At least two of the causes of the crisis – gharar (risk) and gambling – are banned by sharia (Islamic law).
“Several of the ethical lapses which occurred in the financial sector are prohibited in Islam,” says Omneya Abdelsalam, the director of the El Shaarani Research Centre for Islamic Business and Finance and the director of the MSc in Islamic Finance at Aston Business School. “[The crisis] highlighted the resilience of Islamic banks.”
She says that religious beliefs, not limited to Islam, can help leaders be more responsible in business.
“The belief in God, and that absolute ownership of everything is solely His, brings with it an acute level of responsibility and accountability based on the notion of stewardship, which is equally placed on each individual, given that all mankind is believed to be equal before God.
“Such beliefs have a direct and powerful impact on the way business is conducted.”
This “notion of stewardship” or khalifa, common to all Abrahamic faiths but particularly central to Islam, overlaps considerably with corporate social responsibility and transparency, two areas that have enjoyed a post-crisis boom.
Dr Abdelsalam says khalifa manifests itself in Islamic businesses “through fulfilling social responsibility of the business to the best of its capabilities, including fair treatment of employees, care for the environment and customers, and fulfilling the obligation towards shareholders and other stakeholders, through wise use of financial resources”.
At Aston, the Masters in Islamic finance encourages students to think about ethics in every module, be it accounting, contract law, or conventional finance modules.
Cedomir Nestorovic, a professor of Islamic business and management at the Singapore campus of Essec, a French business school, agrees that Islamic finance courses need to address these issues.
He says: “A course about Islamic finance should not be teaching financial techniques alone. There must be a part dealing with religious and ethical issues, explaining the rationale behind the industry.”
Prof Nestorovic adds that elements such as marketing and management must also become more integral parts of Islamic courses, so that they increase their breadth.
One criticism aimed at Islamic finance instruments and banks, or Islamic finance divisions within conventional banks, is they do not embrace the spirit of sharia, but try to find ways round it, in an emulation of conventional finance.
“There is a trend to consider Islamic finance as a ‘cosmetic’ industry where products and services are conventional ones with an Islamic veneer, the only purpose to obtain clearance from thesharia board,” says Prof Nestorovic.
The danger is that Islamic finance, in trying to become more popular, loses its firm roots in religion and ethics.
Some Islamic scholars, adds Prof Nestorovic, “consider that Islam finance does not exist because riba (interest, banned under sharia) is embedded in contracts, even if it is not labelled as such”.
“There is also a certain disagreement between Islamic countries about the definition of a tangible asset and some accounting principles.
“All in all, there is a gap between what is taught and realities for a certain number of observers,” says Prof Nestorovic.
MIDEAST STOCKS-Saudi rebounds, no impact from Nayef death - Reuters
DUBAI, June 17 |
DUBAI, June 17 (Reuters) - Saudi Arabia's main stock index rose on Sunday, recovering the previous day's losses as the death of the kingdom's crown prince ceased to have an impact.
Qatar's index was again weak and Bahrain steady, while markets in the United Arab Emirates, Kuwait and Oman were closed for a religious holiday. Egypt was also shut for the country's presidential election.
Saudi Arabia's benchmark rose 0.4 percent. It fell 0.3 percent on Saturday, having been down as much as 2.6 percent intra-day in a knee-jerk reaction to Crown Prince Nayef's death eight months after he became heir to the throne. The index is now down 14.8 percent from early April's 3-1/2 year peak, as declines in oil and world equity prices have spurred local selling.
"Yesterday's volatility was to be expected when we have this kind of news, but the market then recovered and I don't think it will be major factor today - Prince Nayef was known to have had health problems so his death wasn't a complete surprise," said a Riyadh-based fund manager, asking not to be identified.
"The authorities will probably give some clarity on the succession soon and today's trading will be more linked to what's happening outside the region."
Although Nayef was known for his strong management of security issues in the country, analysts see no reason to think foreign or political policies, much less economic policies, will change under his successor.
Gains in world markets on Friday helped support Saudi sentiment. Investors fear Sunday's Greek elections could unleash fresh turmoil in the euro zone if the next government in Athens scraps Greece's bailout deal, but this is offset by hopes that the world's major central banks will make a coordinated response to ease any market dislocation.
In Saudi Arabia, shares in telecoms operator Etihad Etisalat (Mobily) climbed 2 percent and Saudi Basic Industries Corp rose 0.8 percent. Saudi firms are expected to start announcing second-quarter earnings from early July.
"Q2 results will help at least to stabilise the market, but these will be of secondary importance compared with what's happening in Europe, which is flitting between risk-on and risk-off mode," said the fund manager.
"We should see some buying in select names ahead of results, particularly petrochemicals - people are expecting bad results, but not as bad as recent price movements would justify."
The petrochemicals index climbed 0.4 percent, trimming its year-to-date losses to 4.7 percent. The sector has loosely tracked declines in oil prices, with crude seen as a key indicator for both petrochemical product prices and likely demand.
QATAR
In Doha, the main index slipped 0.01 percent to its lowest close since Oct. 6. This took its 2012 losses to more than 6 percent, making it the worst performing Gulf Arab benchmark. About 1.83 million shares traded, the lowest total since July 2011.
"Volumes have been going down lately and I don't think it will get better anytime soon," said a Doha-based trader on condition of anonymity.
"Foreign investors have been selling aggressively to invest in other markets and Qatar trading has slumped - things look anaemic, with a lack of catalysts and better opportunities for investors elsewhere."
Vodafone Qatar fell 0.3 percent. The loss-making telecommunications operator is among the top-performing Doha-listed stocks this year, rising nearly 20 percent, but has fallen 2.5 percent since June 7, when it reported a fourth-quarter net loss of $35 million, missing an analyst's estimate.
NBK Capital last week cut its rating on Vodafone Qatar to hold from accumulate.
SUNDAY'S HIGHLIGHTS
SAUDI ARABIA
* The index rose 0.4 percent to 6,754 points.
QATAR
* The benchmark slipped 0.01 percent to 8,251 points.
BAHRAIN
* The measure rose 0.1 percent to 1,132 points.
Small business confidence in Wales lowest in the UK shows FSB research - WalesOnline
Confidence levels in the small business sector in Wales are the lowest of any nation or region in the UK, according to new research published today by the Federation of Small Businesses.
The FSB’s latest Voice of Small Business Index for Q2 of this year shows in Wales a net balance on business confidence of minus 12 points – representing a two point improvement on the position in Q1.
However, despite a narrowing of the gap between negative and positive outlook responses, Wales swaps places at the bottom of the leaguetable with Northern Ireland, which saw its negative balance improve markedly from minus 33 in Q1 to minus 6.
In terms of confidence the north-east of England have the most upbeat small firms, with a net positive balance of 16 having been minus nine in Q1.
In Scotland, although still in positive terrain, the positive outlook fell from plus nine to plus 4. In the south-west of England it was up 1 point to plus 10.
As well as Wales and Northern Ireland there were also negative balances in London, the Midlands and Yorkshire & Humberside, while for the north-west it was neutral.
Despite pressures, UK-wide confidence just remains in positive territory at plus 1.3, down 0.9 points on Q1.
The survey was conducted before George Osborne’s £100bn liquidity plans for the economy announced in his Mansion House address last Thursday.
The FSB wants his Funding for Lending Scheme to provide cash to those firms that need it, with a clear reporting process so that tangible evidence is given to show the money is being passed on to small firms and not just shoring up the banks.
Janet Jones, Welsh Policy Unit Chair for the Federation of Small Businesses, said: “Overall, the Small Business Index across the UK remains in positive territory, despite a slight decrease since Q1 and despite still only being mildly above zero.
“Although business confidence has not risen as sharply in Wales as in other parts of the UK – meaning we are reporting the worst business confidence – the slight increase does show signs of improvement whilst other parts of the UK have seen a marked drop.
“The index highlights serious constraints to growth, notably access to finance, with many small firms still finding it difficult to access credit which can result in them missing growth opportunities.
“Access to capital is an absolute necessity and the Welsh and UK Governments must give serious consideration to giving small businesses realistic alternatives to bank finance.
“A further issue is that with 63% of small firms saying that fuel is the main upwards driver of business costs, we urge the Chancellor to cancel the planned 3p rise in duty for August.”
The research found that than four in 10 (41%) small firms were refused finance from high street banks as confidence dipped in the second quarter.
However, despite the credit squeeze, more than 50% of respondents said they still plan to grow their businesses over the coming 12 months.
But the proportion of firms looking to grow rapidly shrank from 10.9% Q1 to 7.2 % in Q2.
With one in five firms saying access to finance is the main barrier to achieving growth aspirations, the FSB believes the credit squeeze will impair small businesses’ growth plans, reduce new job creation and further set back the UK’s struggle to emerge from recession.
Of 17 industry sectors measured, confidence fell in all but two. Confidence rose moderately in health and social work related firms, as well as vehicle sales and maintenance companies.
All other sectors reported a fall with financial and real estate services showing a dramatic decrease.
There were further sharp falls in retailing, leisure, sports and entertainment, as well as hotels and the restaurant and bar trade. A moderate decline in confidence was reported in manufacturing, IT and other business services.
US STOCKS-Futures rise after Greek election - Reuters UK
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